Milestone case filed against JPEX in bid to recover crypto funds

Stacy Shi

Two alleged victims of a suspected fraud case surrounding unlicensed cryptocurrency trading platform JPEX have launched a civil litigation against seven defendants to recover around HK$1.85 million worth of Tether coins.

Lawmaker Johnny Ng Kit-chong said the civil case is a milestone, adding around 10 more victims were also hoping to recover their losses through civil action.

As of April 18, police received reports from 2,636 victims involving about HK$1.6 billion. A total of 72 people were arrested and some HK$228 million has been frozen.

According to the writ filed at District Court on Monday, the first six defendants are Australia-listed JP-EX Crypto Asset Platform Pty Ltd, Hong Kong-listed WEB3.0 Technical Support Ltd, three holders of three blockchain wallet addresses, and Felix Chiu King-yin, general manager of over-the-counter virtual money changer Coingaroo.

The seventh defendant is listed as anyone who assisted or participated in transferring the two claimants' assets to the six defendants.

One of the victims, Chan Wing-yan, believed JPEX was a licensed and trustworthy virtual currency trading platform after attending a seminar organized by insurance manager Joseph Lam Chok, also an online influencer, between July and August last year.

Chan then opened two accounts with JPEX in her name and another account under her name and that of the second victim, Herbert Lee Sung-him. Under the guidance of Chiu, she transferred HK$1.85 million to Chiu's accounts at Airstar Bank and Livi Bank for the equivalent value of Tether coins.

One day after the Securities and Futures Commission issued a warning that JPEX was unlicensed and had not applied for a license, JPEX on September 14 restricted users from withdrawing by charging high fees.

Chan on the same day found through legitimate online blockchain explorers that almost all Tether coins in the three accounts had been transferred "within five minutes after each of the deposits was being made" without authorization to wallets with unknown holders, contrary to transactions and balances displayed on the platform.

Chan and Lee are seeking to recover the lost assets and asked the court to prohibit the defendants or their employees from dealing with the assets.

Speaking yesterday, Election Committee lawmaker Ng said the civil action is the cornerstone of the case and believed more lawsuits could be brought forward.

"Around 10 people also plan to make claims ... I believe there might also be people who have yet to contact us."

He said the focus for investors was whether the defendants can repay. He called on law enforcement to step up.

stacy.shi@singtaonewscorp.com